While We in Scotland have been having our wee election, the UK Government and the universities in England have been trying to sort out the future of the higher education system south of the border. And despite the newspaper headlines, it's not just all about fees.

The UK's university system has developed on a piecemeal basis over the years. The elite 'ancient' universities, which have an international reputation and were responsible for most of the research activity were joined in the 1960s by a group of newly upgraded institutions mostly based on longestablished technical or engineering colleges such as Glasgow's Strathclyde and Edinburgh's Heriot-Watt.

Then in 1992, the large civic polytechnics like Aberdeen's Robert Gordon and Edinburgh's Napier, which had specialised in the volume teaching of students in technology and business for their city, were given university status and started awarding their own degrees.

On the planet that universities live on, teaching takes second place to research, and so all of the new universities set out to become research active and tried to copy the format set by the ancients. More and more journals and conferences were created to soak up all the research papers that were now being written, despite the fact most remain unread.

But now, having spent the last 20 years encouraging the development of a system where all universities aspired to the elite 'research-led' status, the UK Government has now decided that our higher education system should be more competitive and diverse.

They would like the 'elites' to polish their international reputations and continue to offer their traditional leisurely three or four-year degrees, but would prefer others to specialise in flexible learning, or part-time study. Some could even abandon the traditional academic year in favour of shorter, more intensive courses, and all would aim to generally better serve the needs of their students.

In a world where most people will require to have several careers during their working life, flexible reskilling will be needed, and much of that could be delivered by universities.

The Lord Browne review of university funding, set up by the previous Labour Government, recommended some sensible approaches: student loans for their fees, provided by the government, and paid back by a graduate tax which only triggers when the individual earns enough in later life.

And crucially, for the first time, such loans are also available to part-time and distance learning students.

The UK Government decided to use the new funding system as the way to encourage diversity. The theory is that universities would become more flexible and compete on price. So far, that has not happened. Three quarters of the universities in England have declared their intention to charge the full £9000 fee and to continue hunting for lucrative foreign students rather than try to adapt to a changing market.

Meanwhile Scottish politicians have simply stuck their heads in the sand, declaring they will have no truck with student charges, either up-front or in arrears. But it is simply not possible in practice for Scotland to do its own thing and also maintain the quality of our universities.

England has now cut funding for teaching in universities by 80 per cent, and that cut will automatically pass through to Scotland under the Barnett formula. Now with the election behind them, they will have to find some way to square that circle.

Scotland, so far, has opted out of this debate. But if we are to continue as an effective modern economy, we can't go on doing this forever. ? Ian Ritchie's company Coppertop advises and supports IT business start-up and growth companies.